NEW YORK (CNNfn) - Treasury bonds ended higher Monday as a sharp decline among U.S. technology shares prompted investors to exit volatile stocks in favor of the relative safety of government securities.
The tech-heavy Nasdaq composite index suffered a sell-off, falling over 3 percent late in the session. In addition, weakness in commodities, notably oil, contributed to gains for bonds.
"These (the Nasdaq and oil) are the key factors driving prices higher in a very thin environment," said Bill Sullivan, senior economist at Morgan Stanley Dean Witter.
Shortly before 3 p.m. ET, the 30-year bond rose 13/32 to 103-22/32. Its yield, which moves inversely to its price, fell to 5.98 percent from 5.99 percent Friday. Ten-year Treasury notes gained 6/32 to 102-11/32, their yield falling to 6.17 percent from 6.19 percent Friday.
As higher commodity prices hint of inflation, fixed-income securities benefited from a slump in oil prices. In New York, April crude oil futures last traded down $1.28 at $29.63 a barrel, falling below the $30 level for the first time since late February. Traders attributed the decline to expectations that the Organization of Petroleum Exporting Countries (OPEC) will increase production at its meeting next week.
The Fed ahead
Treasury prices had been confined to narrow trading ranges throughout the session ahead of Tuesday's Federal Reserve monetary policy meeting.
The market's gains were more pronounced in longer-dated maturities as shorter-dated issues, such as two-year notes, remained pressured due to their sensitivity to interest rates
Analysts were not surprised activity was subdued ahead of the Fed meeting, noting there also was a lack of key economic news to provide direction.
Market strategists widely expect the central bank to increase short-term interest rates by a quarter-point Tuesday, bringing the fed funds rate, the rate at which banks charge each other for borrowing money, to 6 percent.
With no signs of a U.S. economic slowdown, the Fed continued its "gradualist" tightening approach last month by raising rates a quarter point, its fourth hike since June. However, the economy remains strong and core inflation, which excludes volatile food and energy components, remains well behaved.
Looking ahead, Bruce Alston, director of fixed income at Value Line Asset Management, was upbeat about Treasurys. He told CNN's Before Hours he expects bond yields to be "well below 6 percent" in one year. (174.6K WAV) (174.6K AIFF)
Dollar weakens
The dollar fell slightly against the major currencies Monday. Shortly before 3 p.m. ET, the dollar changed hands at 106.32 yen, down from 106.89 yen Friday, a 0.5 percent loss in the dollar's value.
Meanwhile, the euro traded at 97.35 cents, up from 97.19 cents Friday, a 0.2 percent loss in the dollar's value. "We're still consolidating in a broad trading range," said Marc Chandler, chief currency strategist at Mellon Financial Corp., referring to the euro.
Chandler forecasts a further move to the upside, above the 97.50 level within a day or two. 
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